Boston-based Fidelity Investments has filed to launch the first zero-expense ratio index mutual funds in the U.S.
The new funds, the Fidelity ZERO Total Market Index Fund (FZROX) and the Fidelity ZERO International Index Fund (FZLIX) will carry a zero-percent fee regardless of how much money is invested in the funds. Both funds have no investment minimums.
Fidelity has also launched a series of account improvements for its customers, including eliminating all minimums to open accounts, account fees and domestic money movement fees.
Fidelity is also removing all investment minimums on its retail and advisor mutual funds and 529 plans, while streamlining pricing by creating a unified expense structure across share classes and asset levels. Fees on funds such as the Fidelity 500 Index (FUSEX) and the Fidelity Total Market Index (FSTMX) have been lowered from 9 basis points to 1.5 basis points, or 0.015%.
Fidelity now claims that the expense ratios on its index funds are now lower than most comparable funds from competitors like Schwab and Vanguard.
“We are charting a new course in index investing that benefits investors of all ages—from millennials to baby boomers—and at all affluence levels and stages of their lives,” said Kathleen Murphy, president of Fidelity Investments’ personal investing business, in a released comment. “The ground-breaking zero expense ratio index funds combined with industry-leading zero minimums for account opening, zero investment minimums, zero account fees, zero domestic money movement fees and significantly reduced index pricing are unmatched by any other financial services company.”
Fidelity is a privately-owned compamy controlled by the Johnson family. Consequently, it doesn't have to report to Wall Street and can make long-term investments that may lose money in the short term but enhance its long-term competitive position in the financial services industry.